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The act of postponing payments or breaking up large purchases into smaller payments has been attractive for customers since eCommerce came into being. With the rise in popularity of the financial product ‘Buy Now Pay Later’, many fintech companies are now offering BNPL for SMEs as well.

There are nearly 6 million6 million MSMEs (Micro, Small and Medium Enterprises) in India, and consistency in cash supply helps in their growth and development. Fintech companies like KredX are showing the way for ‘Buy Now Pay Later’ for SMEs. Read on to know the details.

How BNPL for SMEs Work?

In simple words, ‘Buy Now Pay Later’ enables customers to make payments for their purchases at a later date. It works as a short-term financing option. A business makes this option available to customers at the point-of-sale. When checking out, customers can choose the BNPL payment option.

Before approving this credit facility, the credit profile is examined minutely. Upon approval, the customers will have to pay a portion of the amount then and there. He/she can pay the remaining amount over a stipulated period of time.

After its success in the B2C sector, BNPL is now becoming a popular option for small and medium businesses seeking formal credit online.

Given below are steps by which BNPL works for SMEs:

Step 1: Business buyers visit a merchant's online store and purchase a product.

Step 2: They choose BNPL at the payment gateway. Then, they need to agree to the BNPL service provider's terms and conditions.

Step 3: Buyers place the order. They can opt to pay the entire amount later. Note that the merchant will receive the amount immediately.

Step 4: Buyers can choose to convert the total purchase amount into low/zero interest amounts.

Advantages of BNPL for SMEs

Given below are the advantages of BNPL for SMEs:

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  • Decreases Cart Abandonment
  • The absence of convenient payment options increases cart abandonment in our country. Businesses can reduce it by introducing the ‘Buy Now Pay Later option. BNPL option is a customer-friendly payment option. It helps in retaining B2B customers and the growth of one’s business in case of online methods.

  • Attracts Customers
  • The BNPL option is a good strategy to attract new customers to an online store. This is because it enables people to make expensive purchases they were wary of making earlier. Furthermore, the ‘Buy Now Pay Later’ option encourages new clients to join. Making purchases through the BNPL credit facility is more advantageous than buying with credit cards due to its lower charges and ease of payment.

  • Increases Sales
  • The 'Buy Now Pay Later' option encourages customers to buy more. This is because the instalment payments of the BNPL credit facility make the seller’s goods/services more affordable by offering an easy repayment option. When one’s customers buy more, the entire value of the orders also increases. This entire process paves the way for the growth of SMEs.

  • Inventory Management
  • Managing the inventory becomes easier for businesses that offer the BNPL option. When buyers place orders in bulk, one needs to increase the numbers and pace of production. Moreover, the ‘Buy Now Pay Later’ option helps producers get an idea of the number of products that they need to restock. Additionally, it helps small businesses save costs by not overstocking and producing the requisite amount of products only.

  • Improvement of Customer Lifetime Value
  • Customer Lifetime Value, commonly referred to as CLV, is the entire time the customer spends in a store in his/her life. By offering BNPL for SMEs, a business can build a loyal customer base by increasing their purchasing power and reducing their financial burden.

  • Maintenance of Cash Flow
  • BNPL is an effective option for the maintenance of a B2B seller's cashflow. While customers receive the product immediately, the business is also assured of payments. This is helpful for small businesses as they can maintain cash flow smoothly and develop their business.

How to Use KredX Pay Later Solution for Small-to-Medium Enterprises?

Given below are the steps by which SMEs can use KredX's BNPL solution:

Step 1: Fill up the application form and sign the requisite document.

Step 2: Furnish the requisite details and ensure that you complete API integration.

Step 3: You can view BNPL at your payment gateway upon successful integration.

Step 4: Business owners will receive the details of outstanding payment within minutes of a buyer purchasing a product.

As shown above, integrating KredX's Pay Later solution for business transactions is a hassle-free process.

Our ‘Pay Later’ solution uses highly advanced technology and provides working capital finances to MSMEs. Its quick and easy digital process and smooth purchase experience allow brands and enterprises to increase their average sales by 40%. Additionally, B2B sellers can increase their cart conversion rate by 30%.

Bottom Line

Technology is all set to change the economic landscape of India in the near future. With the country being one of the fastest-growing markets for digital consumers, there is much need for an innovative payment method in the B2B sector. BNPL for SMEs will be most beneficial in helping small businesses leverage India’s rapid digitization and take their businesses to new heights.

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FAQs

There are two types of BNPL program limits. Buyer limit and maximum limit provided. In the buyer limit, the BNPL program limit depends on a buyer's sanction limit. One can distribute the maximum limit provided among multiple buyers.

One needs to subtract the current repayment liabilities from a buyer’s purchases with the anchor to arrive at the sanction limits. But there are other factors as well that help one understand the risk.

BNPL for SMEs help new-to-credit buyers repay small-ticket loans and improve their creditworthiness.

People who have a CIBIL score above 650 or are new to credit can use KredX BNPL online platform.